Sunday, April 27, 2008

A Random Walk Down Wall Street

Saturday I finished A Random Walk Down Wall Street by Burton G. Malkiel. I liked it a lot. The author advocates a buy and hold investment strategy. Most of the book is spent comparing buy and hold with other strategies. The last few chapters of the book give concrete advice on how to setup an investment portfolio.

I think I'm going to take Malkiel's advice and buy and hold from now on. I have a modest amount of money to invest and a ShareBuilder account. I've picked several ETF's. On May 6th, Ill put half my money into the market. A few months later I'll put the other half in. By then I should have more to invest and I'll put that in a few months after putting the second half in (sort of like Dollar Cost Averaging -- I just don't want to put it all in at once in case that's the wrong time to do it) .

With a ShareBuilder account, it costs just $4 to make an "automatic investment". I think they batch up everybody's orders and execute them all at once on Tuesdays. So, if your purchase is at least $400, your cost to get into the market is 1% or less. I think it then costs $9 to sell shares. You can schedule investments to take place on a regular basis or just when you have the money. It seems like a good place to implement a buy and hold strategy with multiple purchases of the same shares over a period of time.

On or just after May 6th, I'll reveal which ETF's I picked for my portfolio. As the months go by, I'll update this blog with how I'm doing. Maybe I'll write a python script to grab stock data and produce pretty little graphs.

Random Walk is the second book in my "try to read more books program of self-improvement". The next book in the program is Freakonomics and the one after that will probably be The Tipping Point.

Each time I read a book, I'll review it here. If you see a book reviewed here that you'd like to read, let me know and I'll loan it to you. If you know of a good book that you think I should read, I'm open to suggestions. Reading good books seems to make me smarter (and we all know I need as much of that as I can get).

No comments: